Scarring and ethnicity: An agenda

There is a substantive literature showing that the poor labor market integration of young people can have long-term negative impacts on their adult lives, for example by increasing the probability of subsequent periods of unemployment or by affecting their income (Gregg 2001). We also know that migrants and their children perform differently in the labor market than majoritarian populations. In particular, those coming from developing countries are often disadvantaged in terms of access to jobs (Heath and Cheung 2007). However, surprisingly little is known about how early job insecurity affects different ethnic groups in the labor market over time. Our study (Zuccotti and O’Reilly 2017) addresses this gap in the literature by examining the impact of the early labor market status of young individuals in the UK on their later labor market outcomes ten years later, focusing on how this varies across ethnic groups and by gender.

The study: Data, ethnic groups and methods

The research was based on the Office for National Statistics Longitudinal Study (ONS-LS), a data set linking census records for a 1% sample of the population of England and Wales across five successive censuses (1971, 1981, 1991, 2001 and 2011). We studied men and women who were aged between 16 and 29 in 2001 and followed them up in 2011, when they were between 26 and 39 years old. In particular, we looked at whether an early experience of being NEET (not in employment, education or training) affected their employment probabilities and occupational status ten years later. The analysis focused on White British and second-generation minority groups born in the UK; we also included individuals who arrived in the UK at a young age. The ethnic minority groups we studied were: Indian, Pakistani, Bangladeshi and Caribbean.

How scarring effects vary by ethnicity and gender

Our study shows that – on equality of education, social background and neighbourhood deprivation – those who were not in employment, education or training in 2001 have around 17 percentage points less chance of being employed in 2011 and around 10 percentage points less chance of being in a professional/managerial position compared to those who were employed in 2001.

However, the transmission of disadvantage occurs differently across ethnic groups and genders: some groups/genders perform better (and others worse) in terms of overcoming an initial disadvantaged situation. Scarring connected to a previous period of being NEET is less severe for Asian men: Indian, Pakistani and Bangladeshi men who were NEET in 2001 have a higher probability of being employed in 2011 than equivalent White British men. Pakistani and Caribbean women, on the contrary, experience a deeper scar connected to a previous period of being NEET than White British women.

Implications of our study: Who should be the target of policies?

Often, being an ethnic minority is equated with being disadvantaged, but our results show that this is not universally the case in the UK. The fact that some ethnic minorities are less penalised by previous unemployment or inactivity, compared to some of their White British counterparts is, in part, good news in terms of integration processes. Further research is needed to understand the mechanisms behind this finding. These could include parental aspirations, motivational factors, the role of networks at the neighbourhood and the university level (especially for Indians and Bangladeshis), the exploitation of resources such as internships and the type of university degrees chosen.

However, significant concerns remain regarding employment probabilities among young White British men, for whom scarring connected to having experienced a period of unemployment or inactivity is particularly high. At the same time, there is also an ‘ethnic minority disadvantage’ in the labour market for women: this could be connected not only to discrimination, but also to the cultural values of the different groups. More research is needed to explore the determinants behind these results.

In the context of a dramatic rise in youth unemployment since the 2008 crisis (O’Reilly et al. 2015), understanding how and why early labor market experiences differently affect later outcomes for different ethnic groups and genders can help develop more targeted policies. This is particularly relevant in countries where the number of ethnic minorities is considerable and increasing.

We are grateful for the detailed comments and suggestions by Martin Seeleib-Kaiser, Paola Villa and Eskil Wadensjö. Thank you also to the STYLE researchers who commented on this work during our meetings.